Method of calculation

The net asset value is calculated with the help of so called EBIT-multiples that are multiplied by a 12 month historic rolling operating result (EBIT) for each business area. The key to a true and fair value is to find true and fair multiples. This is done by identifying comparable listed companies in the industries where Latour’s wholly owned operations are active. An EBIT-multiple is calculated for each company by relating the company’s operating result to the EV (Enterprise Value). The EV consists of the market value adjusted for the net debt/equity ratio in the comparable company. Since the comparable listed companies are valued differently by the market, an interval of EBIT-multiples is created for each of Latour’s business areas. The interval provides an indication of the value the market puts on Latour’s wholly owned operations.

The net asset value for the wholly owned operations is then combined with the market value of the listed holdings. After that the value of other assets is added on and Group net debt is deducted. The remaining amount is Latour’s net asset value. This valuation should be seen as indicative and not as a complete market valuation. for example, the net asset value model does not consider future forecasts for Latour’s holdings, or comparable companies. The fluctuations in the business cycle in the last few years mean that the results for the business areas as well as for comparable companies vary considerably. This means that comparable multiples stretch over a great span. Therefore this presentation has adjusted used multiples in order to avoid unreasonable values. Other valuation multiples (such as EV/Sales) have also been used to support the chosen multiple span.

This is how the method works – step by step

1. Identification of listed comparable objects

First listed companies operating in the same industries as Latour’s wholly owned industrial and trading operations are identified.

2. Calculation of EBIT-multiples

When all comparable objects have been identified a review is made of the companies’ EBIT-multiples. An EBIT-multiple is based on the company’s EV (Enterprise Value). The EV is calculated by taking the market value and increasing it by the company’s net debt. The EV is then divided by the operating result (EBIT). A company that has a share price of SEK 90 m, a net debt of SEK 10 m and an operating result of SEK 10 m per share will consequently have an EBIT-multiple of 10.

3. Conversion to multiple spans

When an EBIT-multiple has been calculated for each company they are weighted group-wise, so that each business area receives its own multiple span. The reason a span is necessary is because there are variations in the listed companies’ valuations, which lead to different EBIT-multiples. Let us say that there are two comparable objects for the Swegon business area, where one has a multiple of 6 and the other has a multiple of 10. The EBIT-multiple used to calculate the value of the Swegon business area is in the span 6–10.

4. Combining the net asset value of the wholly owned operations

When the spans for the EBIT-multiples are established, such as 6–10 in the example in step 3, a valuation of each business area can be made. This is done by first calculating a 12 month rolling operating result (EBIT) for each business area, based on the company’s structure at the end of the period of comparison. This figure is then multiplied by the EBIT-multiple. An example: Let us say that the Swegon business area shows a 12 month rolling operating result (EBIT) of SEK 100 m. If the EBIT-multiple 6–10 is then applied on the result we will end up with a value of SEK 0.6–1.0 billion. when these calculations have been made for all the business areas the result is combined for a total value of the wholly owned operations in one span.

5. Combined with the value of the listed holdings

The share price is first established for each individual holding at the end of the period in order to arrive at a net asset value for the listed holdings. This is multiplied by the number of shares owned in each listed company. These share prices lead to a net asset value for the listed holdings. This is then combined with the net asset value of the wholly owned operations, which has been calculated into a span in steps 1–4. This total, together with other assets and net debt, is the net asset value, also given as a span, for Latour’s entire holdings.